How to manage unexpected income?
Saving | March 8, 2010 at 1:24 amIncome or money that arises out of nowhere, not exactly, is unexpected income. It can be anything like a birthday check of $20 or an income rise or a dividend. However, “anything” can be quite a vague categorization. Hence, let us divide this income into two categories: One time and Regular Income.
One Time
One time income can be tax refunds, or rebate check, or birthday money, or something like that. However, it comes quite often then we realize and instead of spending it appropriately, we squander the amount. Let’s have a look at how we can utilize it.
If the amount received is below $50, use it for fun. You cannot do much with $50.
If the amount is between $50 and $100, you can use it pay some of your bills. Or maybe add it to your savings.
If the amount is above $100 and below $1000, divide it into two and use it to repay your debt or bills and add the other half into savings.
And if it exceeds $1000, it is highly recommendable to use it to repay your high interest loans, save for a new home, or pay huge bills.
Regular Income
You would ask how can regular be unexpected? It can. You get few income, you know it’s coming, but you don’t know when, hence it’s comes unexpectedly. This would include unexpected income rise, dividends on stocks, etc.
If you are buried under debt, a very logical step is to put this unexpected regular income to repay your debts. However, if you don’t have much to repay, you should save or invest this amount. You can utilize this amount for your 401(k), Roth IRA, traditional IRA, or other long term savings.
And if you have already invested considerable amount into these funds, you can invest unexpected income in other investment instruments like stocks, bonds, gold, or foreign currencies.
Do you have better ideas to utilize unexpected income?
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Managing money is the biggest hassle in the world! Sometimes I wonder who made the term and thing money!
Unexpected Income in my case is nil maximum number of times! I have never got any of it.
Unexpected income is the least expected income! out of 10000 1 person will be lucky enough to get it.
Sweet and small blog of showing some dreams of getting extra money.
I don’t know but I was lucky. Once on road while going to catch the tram, I found $5 and I din’t had change while buying ticket. This $5 came so much in handy